Qunar denies CCTV report of fake flight-delay insurance

NASDAQ-listed Qunar.com Inc, a Chinese online travel service provider, refuted on Sunday a report by China Central Television (CCTV) on the same day that alleged that flight-delay insurance products bought by customers on the company's site have "disappeared."

The company said that the online system of China Pacific Insurance (Group) Co (CPIC), the provider of the insurance products, had suffered a malfunction, causing insurance buyers to be unable to trace their bills on CPIC's website via the codes auto-generated on Qunar, according to a post on its Sina Weibo account on Sunday.

The system is still being repaired by press time, a customer service staff with CPIC told the Global Times Sunday.

Qunar's explanation has not convinced some analysts, who believe that it may just be an excuse.

As an online travel agent (OTA), Qunar is responsible for ensuring that all products and services offered on its website must function well, said Zhao Zhanling, a legal counsel with the Internet Society of China.

The company should have been informed of CPIC's system failure right away, Zhao told the Global Times Sunday.

Qunar's statement came immediately after CCTV reported Sunday morning that the company sold "fake" flight-delay insurance products, citing Web users' complaints.

A Web user named Wang Zheng was quoted by CCTV on Sunday as saying that he had bought a 20 yuan ($3.26) flight-delay insurance coverage with a Shenzhen-Hangzhou flight ticket in October, but could not find his insurance bill on CPIC's official website.

Consumers who bought such products on Qunar but failed to find their insurance bills on CPIC can still receive normal insurance service, said Qunar.

Zhao noted that if consumers filed a lawsuit over this matter, Qunar would have to take on some joint liability.

This is not the first time that online travel services have been the subject of fake insurance allegations.

Qunar's major rival Ctrip.com International, also listed on NASDAQ, was sued by a couple in 2009 for selling counterfeit insurance offered by a third-party insurance agent and was required to pay 2,200 yuan in compensation.

"China's OTA is always a mixed market with the lack of strict regulation, making it possible for some profit-pursuing OTAs and third-party insurance agents to offer fake insurance on behalf of established insurance companies," said Wei Changren, general manager with Beijing-based Jinlü Consulting.

Wei believes that as a US-listed company, it is unlikely that Qunar would have committed the acts in the CCTV report.

"But it is hard to say in the future [if regulations are not strengthened]. In order to offset the loss caused amid increasing marketing costs and declining agent commission fees, companies like Qunar may take advantage of weak domestic rules," Wei told the Global Times Sunday.

Qunar recorded a 421.6 million yuan net loss in the second quarter of 2014, compared to a loss of 41.2 million yuan in the same period of 2013, attributing the increased loss to investment in product development and marketing efforts, read a financial report issued in August.